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Weekly roundup: US dollar unable to capitalise on modest inflation uptick

currency-newsWeekly roundup: US dollar unable to capitalise on modest inflation uptick
Even though the US inflation rate picked up in August this offered little in the way of support to the US dollar as the general sense of market risk aversion diminished.

While the headline inflation rate unexpectedly jumped from 1% to 1.3% on the year this is unlikely to alter the current outlook of the Federal Reserve.

As the Fed has already signalled its intention to look through any increase in inflation in the name of supporting the US economy the chances of an interest rate move remained muted.

With investors taking a more optimistic view in the wake of AstraZeneca restarting its Covid-19 vaccine trials over the weekend the potential for USD exchange rate gains faded.

Wednesday’s Federal Open Market Committee (FOMC) interest rate announcement may deliver little in the way of news, with rates looking set to remain on hold for the foreseeable future.

However, the latest commentary from policymakers could still alter the mood towards the US dollar as investors look for any shift in sentiment.

If the Fed’s economic projections point towards the US economy struggling to regain its momentum in the months ahead this could keep the US dollar on the back foot.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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